Category Archives: Assistance

As you approach adulthood and start to think about your future, are you really ready to be financially responsible for yourself? If you answered no, you’re not alone. The Jump$tart Coalition administered a basic financial literacy test to high school seniors, and less than half of the students correctly answered the questions. Another study found that over 75% of college students believe they are not ready to make smart financial decisions for themselves.

Pretty scary, isn’t it? If you think about it, most of your friends probably don’t know how to balance a checkbook. In fact, very few teens actually have a savings account or know what long-term investing means. Do you?

A 2009 Capital One survey discovered that 50% of teens wished they knew more about personal finances. Whether you have never stepped foot in a bank or you are actively saving and investing for your future, all it takes is a little effort and a lot of patience to become confident in your financial decisions.

A Millionaire’s Best Friend

One awesome thing that you can take advantage of is compound interest. It may sound like an intimidating term, but it really isn’t once you know what it means. Here’s a little secret: compound interest is a millionaire’s best friend. It’s really free money. Seriously. But don’t take our word for it. Just check out this story of Ben and Arthur to understand the power of compound interest.

Ben and Arthur were friends who grew up together. They both knew that they needed to start thinking about the future. At age 19, Ben decided to invest $2,000 every year for eight years. He picked investment funds that averaged a 12% interest rate. Then, at age 26, Ben stopped putting money into his investments. So he put a total of $16,000 into his investment funds.

Now Arthur didn’t start investing until age 27. Just like Ben, he put $2,000 into his investment funds every year until he turned 65. He got the same 12% interest rate as Ben, but he invested 23 more years than Ben did. So Arthur invested a total of $78,000 over 39 years.

When both Ben and Arthur turned 65, they decided to compare their investment accounts. Who do you think had more? Ben, with his total of $16,000 invested over eight years, or Arthur, who invested $78,000 over 39 years?

Believe it or not, Ben came out ahead … $700,000 ahead! Arthur had a total of $1,532,166, while Ben had a total of $2,288,996. How did he do it? Starting early is the key. He put in less money but started eight years earlier. That’s compound interest for you! It turns $16,000 into almost $2.3 million! Since Ben invested earlier, the interest kicked in sooner.

What You Can Do Now

The trick is to start as soon as possible. A survey by Charles Schwab found that 24% of teens believe that since they are young, saving money isn’t important. Looks like we just blew that theory out of the water! That same survey also discovered that only 22% of teens say they know how to invest money to make it grow. Why not change that stat and learn how to become a smart investor with your money? Talk to your parents or teachers about how to open up a long-term investment account so you can become a millionaire, too. And remember, waiting just means you make less money in the end. So get moving!

Really, you don’t have to have a lot of money to understand basic, common courtesy when it comes to finances. This isn’t difficult stuff.

So why do some people refuse to leave a decent tip, and why do other people feel like they must tell everyone in their church group how much they make?

These, dear readers, are financial faux pas—the worst of the worst etiquette mistakes people make with their money.

Don’t find yourself falling prey to one of these dubious mistakes.

1. Tipping poorly.

Dear Ms. Bad Tipper: Nothing says, “Thank you for taking my order, bringing my food, refilling my drinks, and providing good overall service,” like that $1.56 tip you left on your $20 order. Just think: If your server invests that $1.56 tip in a 12% growth stock mutual fund, they’ll have $17.20 in 20 years! How fancy! In all seriousness, here’s a tip about tipping: Unless your server cursed at you and threw grilled eggplant at your wife, tip 15–20%. Is that really too much to ask for someone who helped you put food in your belly?

2. Talking about how much money you make.

Unless you’re calling into Dave’s show to make your debt-free scream, your household income really isn’t relevant information in everyday conversation. Usually, people who freely share this type of personal information are high-earners, so it only comes across as bragging. Every conversation is a new opportunity to share their income: “Hey Jim. What about that storm last night? Thought a tree might fall on my house, but I make 250k a year, so we could’ve handled it. How’s your wife?”

3. Talking about how much you give.

This one is just as bad as talking about how much you make. No doubt that building wealth and finding financial peace is all about giving to others and changing your family tree. But that doesn’t mean you should broadcast the amount you tithe and give to charity like it’s a tattoo on your forearm.

Genuine givers are humble and even secretive when it’s called for. If you’re giving in hopes that one day you’ll have a county bridge named after you and a statue in town square, then you’re giving for the wrong reasons.

4. Bumming off your friends all the time.

Every group of friends has one. The bum. The mooch. The guy who always realizes he’s “forgotten” his cash right when the check arrives.

Don’t be that guy. Here’s the thing: You might save a couple of dollars here and there, but at what cost? Everyone in your group of friends knows what’s up. They aren’t stupid. You’ve been labeled as the “group mooch.” And, before long, you won’t get invited to dinner, and then you’ll become “the guy who invites himself to dinner,” in addition to being the group mooch. Then you’ll become a social pariah and never score another date—all because you weren’t willing to pay for a $3 taco.

5. Making unreasonable offers when negotiating.

One of the quickest ways to end a negotiation is to make a ridiculous offer. It shows the seller that you aren’t serious about buying and you think they’re stupid. You’re saying, “Hey idiot. You obviously have no concept of the cost of physical objects that exist on this Earth. But, tell you what, I’ll humor you and offer you 40% of your asking price. You’re welcome. Dummy.”

How do you know if you’re making an unreasonable offer? Put yourself in their shoes. Would you take $150,000 for a house that’s listed for $275,000? Would you take a quarter for a lamp that’s priced $10 at a garage sale?

6. Putting business over friendships.

Dave says all the time that business partnerships are a bad idea. Why? Because business and friendships rarely mix. There are too many complications and emotions involved. But good friends part ways all the time because someone decided to throw business into the mix.

It’s the guy who thinks his buddy with a nice office job is obligated to make a spot for him. It’s the guy who gets into a multi-level scheme and proceeds to badger all of his friends to “not miss this opportunity!” It’s the athlete who signs his first big contract and feels like all of his childhood friends deserve a cut. A business opportunity may improve, but a friendship will soon end. You can count on that.

In a recent article by the Wharton School of Business at the University of Pennsylvania, it was revealed that some Millennials are not looking to purchase a home simply because they don’t believe they can qualify for a mortgage.

The article quoted Jessica Lautz, the National Association of Realtors’ Managing Director of Survey Research, as saying that there is a significant population that does not think they will be approved for a mortgage and doesn’t even try. The article also quoted Fannie MaeCEO Tim Mayopoulos :

“I do think that there’s a sense out there in the marketplace among borrowers that credit may not be available, especially for people with lower credit scores.”

So what credit score is necessary?

A recent survey reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780.

In actuality, the FICO score on closed loans (as reported by Ellie Mae) is much lower and has been dropping over the last several months.

Bottom Line

Millennials who are considering a home purchase should get advice from a local real estate or mortgage professional now. They may be surprised how much the requirements for a mortgage have eased.

The Federal Housing Administration (FHA) recently announced its “Back to Work” program, which is giving individuals who suffered a long period of hardship during the recent housing crisis a second chance to prove they can carry a mortgage and own a home.

The program will waive many of the waiting periods associated with a significant “economic event” such as bankruptcy (Chapters 7 and 13), short sale or foreclosure.

Potential candidates may be first-time or repeat home buyers, and the program can be used for the 203K rehab loan. It must be approved by an FHA lender, and as some lenders are choosing not to participate, you may want to contact your mortgage professional for more information on this.

Eligibility

To participate in the program, individuals must be able to demonstrate they’ve recovered fully from the “event”, and document the fact that they did have a household income loss of at least 20 percent for a period of at least six months that coincided with the “event.” They also need to prove current, stable and documentable employment to qualify.

As well, they need to demonstrate a 12-month positive payment history, and this specifies on-time payment of all mortgage and installment debt. There is some latitude for credit card debt, but it is slight.

Counseling sessions

Applicants also must attend counseling sessions before being able to participate in the program. This is usually a one-hour session with a HUD-approved counselor, and was designed to help participants prevent the “economic event” from happening again.

Actual check received today by one of my past clients who completed a short sale. Envelope reads “Important Payment Agreement Informaton Enclosed” from the Office of the Compftroller of the Currency and the Board of Governors of the Federal Reserve SystemIf you have been foreclosed on or have completed a short sale, don’t be so quick to throw away mail from your past lender. Payments to 4.2 million borrowers will be distributed to those whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the following companies, their affiliates, or subsidiaries: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

In most cases, eligible borrowers will receive a letter with an enclosed check sent by the Paying Agent–Rust Consulting, Inc. Some borrowers may receive letters from Rust requesting additional information needed to process their payments. Rust is sending all payments and correspondence regarding the foreclosure agreement at the direction of the OCC and the Federal Reserve.

Borrowers can call Rust at 1-888-952-9105 to update their contact information or to verify that they are covered by the agreement. Information provided to Rust will only be used for purposes related to the agreement.

Watch out for scams. Beware of anyone who asks you to call a different phone number than the number above or to pay a fee to receive a payment under the agreement.

SO WHAT’S THIS ALL ABOUT
The Federal Reserve Board issued enforcement actions against four large mortgage servicers
–GMAC Mortgage, HSBC Finance Corporation, SunTrust Mortgage, and EMC Mortgage Corporation–in April 2011. Under those actions, the four servicers were required to retain independent consultants to review foreclosures that were initiated, pending, or completed during 2009 or 2010. The review was intended to determine if borrowers suffered financial harm directly resulting from errors, misrepresentations, or other deficiencies that may have occurred during the foreclosure process.

Some buyers in hot markets with a low inventory of homes for sale are losing out over and over in multiple-offer competitions. You can improve your chances of having an offer accepted by clearing up any issues that might cause a seller to look askance at your offer when compared to one from another buyer.

If your purchase offer is littered with contingencies that protect you, the sellers are more likely to see the contract as risky, especially if they are looking at other offers that contain fewer contingencies.

A clean contract is free of contingencies, which can give buyers a competitive advantage, especially if they are offering less than full price or are in competition with other buyers.

Timing is everything in the home sale business. Buyers often lose out on the opportunity to make an offer on a listing because they are traveling for business or vacation. One partner may see the home of their dreams, but the other won’t be back in town to take a look for days or weeks.

Making an offer contingent on the absentee buyer’s approval of a property is risky from the seller’s standpoint. If the seller accepts the offer, he takes his home off the market not knowing if the absentee buyer will like the house enough to buy it.

It would be very difficult to get such an offer accepted if there are multiple offers from buyers who have all seen the property. The Internet can give a great introduction to a listing, but it usually doesn’t include photos of items that might cause you to pass on the property, like a neighbor’s home that is in poor repair or a location close to a noisy freeway.

Some buyers buy property without having seen it. To get an offer accepted, these offers usually have a generous price, and close quickly. The buyers may later find problems that they could have discovered had they seen the property before making an offer. It’s better for both buyers and sellers if all potential buyers have seen the property before an offer is made.

HOUSE HUNTING TIP: Try to anticipate if there is any condition of your home purchase that would cause the sellers to shy away from accepting or countering your offer. If such conditions exist, try to address them before you make an offer.

For example, let’s say your parents are willing to give you a large amount of cash for a down payment to make your offer more competitive. Make sure this will be acceptable to your mortgage lender.

Find out what verification the lender will require from your parents. If the lender needs a gift letter that stipulates you don’t need to repay the money, have your parents write this letter and include a copy with your offer.

Sellers are always concerned about the buyer’s financial capability to close the transaction. Your offer should include a letter from your lender stating that you are preapproved for the financing that you need. The letter should stipulate that the lender has verified the cash you need for the down payment and closing costs.

If the verification of funds needed to close is not included in the preapproval letter, make a copy of a bank or brokerage statement that verifies the amount you need. Black out the account number and include a copy of this with your offer.

In some areas, buyers are making offers without any contingencies. That is as clean as it gets. However, there can be problems with contingency-free offers. Buyers can feel pressured into waiving an inspection contingency because they’re sure they can’t compete unless they do. The sellers could end up in a legal hassle with the buyers after closing if problems arise that weren’t disclosed to them.

THE CLOSING: Buyers should ask the sellers for permission to preinspect the property before they make an offer without an inspection contingency.

Whether it’s an Open House, or simply presenting your home in the best light, it is necessary to view it from the eyes of a buyer! Any money spent in this area may result in increased profits and a faster sale.

Maximizing Curb Appeal
Before potential buyers even see what the home has to offer, they view its exterior. As a result, an unkempt or unattractive view of the outside of the home could potentially result in a missed opportunity. To show the house in its best light, consider the following:

* Move all materials, including garbage cans and gardening supplies, from the front yard and into a garage or shed

* Mow the lawn and weed and maintain all planted areas

* Replace any outdoor light bulbs that are not working

* Sweep walkways and steps, and remove all small items from the porch or patio

* Replace worn or badly stained door mats

Once a potential buyer enters the home, they need to determine if it will meet their needs and expectations. Give them the best view of the home’s interior by following these steps:

* Remove the home of any clutter by limiting decorative objects and clearing all unnecessary appliances from the kitchen countertops

* Rearrange or remove furniture to highlight the space in a room

* Review each room and clean or vacuum if necessary

These tips can help ensure you receive the highest price possible for your home.

It’s the age old adage, “they just want your money”. And so, time and time again, many people spend countless hours plotting and scheming to try to avoid calling a professional to handle whatever ails them in an effort to save some money. But more often than not, whether it’s the plumber, mechanic, or real estate agent, the sad irony is, eventually the call will need to be made.

Here is the reality, you can’t do it all. And you should not have a problem throwing some money at someone who can do it for you — and do it well.

Are there dishonest people out there who have no intention of providing you great service or have no desire to help you fix your problem? The answer is a resounding yes. However, there are also a number of honest professionals with great integrity who are gifted at what they do and earnestly desire to help provide a solution to your problem.

As it pertains to real estate, adding insult to injury, I have seen, and been a party to, agents who minimize their services and reduce their commission or value just to get a deal done or a listing in hand.

However, any real estate agent worth their weight will, again, have their full fee thrown at them in an instant if they are providing the client with what they deserve — efficiency, great communication, good customer service, and a deep understanding and knowledge of what needs to occur in the transaction. If an agent is all those things, as my grandma used to say “baby, you can write your own ticket”.

Case in point, I recently was involved in a transaction where the seller, before she hired me, tried for years to sell the home on her own because she wanted to “save some money”. In the process of saving some money, she intentionally neglected to pay the property taxes so that she was not paying out more money on the property than the other owners who would also get a piece of the pie when the home sold. However, she failed to consider the penalties and interest that would continue to accrue over the years. In addition, now the county was ready to foreclose on her home due to unpaid property taxes. How’s that for saving some money?

There was no magic bullet when I listed the home and it sold in a matter of days to a cash buyer thousands above list price. The market is hot, and I’m diligent…that’s the magic.

Here’s another example of “savings”:

A Seller’s Internet Inquiry (Q): My husband and I have been purchasing a house from private seller (lease to buy) and it is coming very close to the end of the contract what is involved in transferring the property to our daughters name. Are there taxes or county fees we must pay?

My Response (A): I won’t wallow in what you should have done. The details of your transaction really don’t matter at this point.

Truth is, I cannot advise you. As a REALTOR, I abide by the State of CA DRE laws and regs and am bound contractually to the terms and conditions which were created and ascribed according to the California Association of REALTORs and can be backed up by a slew of real estate attorneys on their payroll. If you had a question which fell under any of those terms, a REALTOR could advise you all day. And as an extra bonus, we would also have the legal power behind us to back you up.

When people opt to go outside of a traditional real estate transaction, ungoverned and unpoliced, they are taking a risk.

Your lease to buy agreement, if you have questions, should probably be reviewed with a real estate attorney, a title company, and a full-time real estate agent. It may not be too late to get the right entities involved.

It’s not worth it in the long run to try to save a little money. If you end up in court, you’ll end up paying way more than you tried to save.”

That’s really all there is to it. You don’t have to try to be captain-save-a-dollar when your real goal should be to have it done right. Let someone help you who knows what they are doing so that you can really save some money.

WASHINGTON – President Obama will lay out a comprehensive regulatory reform plan this afternoon to modernize and protect the integrity of our financial system. While this crisis has had many causes, it is clear now that the government could have done more to prevent these problems from growing out of control and threatening our overall economy.

The President will be joined by Treasury Secretary Tim Geithner, representatives from the regulatory community, consumer groups, the financial industry and me mbers of Congress for an event in the East Room later this afternoon.

The President’s plan will:

– Require that all financial firms that pose a significant risk to the financial system at large are subjected to strong consolidated supervision and regulation – Increase market discipline and transparency to make our markets strong enough to withstand system-wide stress and the potential failure of one or more large financial institutions – Rebuild trust in our markets by creating the Consumer Financial Protection Agency to focus exclusively on protecting consumers in credit, savings, and payment markets. – Provide the government with the tools needed to manage financial crises so it is not forced to choose between bailouts and financial collapse – Raise international regulatory sta ndards and improve international coordination